Russia's legislature is considering a proposal to abolish one of the country's top courts, the Supreme Arbitration Court, and consolidate it under the Supreme Court. The bill before the Duma also would expand the Kremlin's power to politically shape the country on a more granular level via the judicial system amid political and social changes inside the country.

This is the Kremlin's first consolidation of a major part of the Russian system since a series of consolidations in the early to mid-2000s. While there are systematic reasons for the judicial consolidation, the proposal -- spearheaded by Russian President Vladimir Putin -- faces opposition, as the new, larger court would tip the political balance within the country and eliminate a court system that was regarded as more efficient and less corrupt than the Supreme Court.Analysis

Russia's judicial system consists of three courts: the Constitutional Court, Supreme Court and Supreme Arbitration Court. These courts oversee tiers of courts below them: regional, district, magistrate and others. Each high court has its own jurisdiction. The Constitutional Court is largely independent from its two sisters, as it only oversees matters pertaining to the Russian Constitution and disputes between federal bodies. The Supreme Court is the higher of the two remaining courts, having a general jurisdiction over civil, criminal and nearly every other type of case. The Supreme Arbitration Court, also called the Commercial Court, oversees economic and commercial arbitration.

Russia's Judicial System

But even with the distinctions between the types of cases the high courts oversee, there are some discrepancies and ambiguities between the Supreme Court and the Supreme Arbitration Court. The two have fought over power and jurisdiction since their inception in 1993. The Supreme Court and its supporters have argued that it holds final say in all matters except constitutional issues, even though the Supreme Arbitration Court is technically the ultimate venue for all commercial arbitration. The Supreme Court has, in several instances, encroached on commercial cases. This has occasionally led to one court overturning a verdict reached by the other court, and to commercial arbitration cases going to one court instead of the other in attempts to get a favorable outcome.

As far as perception, the Supreme Arbitration Court has been viewed as the more modern, efficient, impartial and less corrupt of the two high courts. The Supreme Arbitration Court's practices have even drawn praise from the European Court of Human Rights. The Supreme Court, however, has faced accusations from within Russia and by foreign groups of being protectionist, political and corrupt. The efficiency of the Supreme Arbitration Court could be attributed to the lighter caseload, as it receives only 35 appeals per month on average compared to the Supreme Court's 200 appeals per month.

There is also a political aspect to the courts' power struggle, because each is aligned with a different political group. The Supreme Court, headed by Vyacheslav Lebedev, is largely considered to have political support from the security hawk siloviki faction within the Kremlin. The Supreme Arbitration Court, headed by Anton Ivanov, is closer to the more reformist and liberal civiliki faction associated with Prime Minister Dmitri Medvedev.

In the past year, competition between the two courts has become increasingly fierce. In 2012, the Supreme Court attempted to create "administrative courts" that would oversee arbitration, meaning that all arbitration would become subordinate to the Supreme Court instead of the Supreme Arbitration Court. The Supreme Arbitration Court was able to block this move in March of this year. In recent months, the siloviki factions put forward the candidacy of Vladimir Vinokurov, who had never served as a judge, for deputy head of the Supreme Arbitration Court in order to infiltrate the system and undermine Ivanov -- something Ivanov was able to block politically because of his ally Medvedev's influence.Attempts to Reconcile the Courts

Major structural reforms to clarify the courts' positions and power have been attempted continually, including previous proposals to merge the two courts. In the past year, Putin has attempted to find a compromise between the courts by proposing an Administrative Judiciary, which would create some sort of supreme judicial panel with three representatives from each of the three top courts. However, Constitutional Court Chief Valery Zorkin deemed this proposal unconstitutional in a rare disagreement between the court chief and the president. A series of criticisms in the media said the proposed Administrative Judiciary was too reminiscent of the Communist Party Central Committee, which developed centralized legal positions in the Soviet Union.

Instead, the president is now supporting the consolidation of the courts, which would give the Supreme Arbitration Court's functions to the Supreme Court, creating what Russian media have dubbed a "super court." The Supreme Court would then increase its number of judges from 125 to 170, which means that the new court would not absorb all of the current 53 arbitration judges. According to Putin, the consolidated court system would streamline judicial procedures and practices and eliminate redundancies.

This consolidation would require a change to the Russian Constitution, which divides the two court systems, though constitutional modifications would be relatively easy under Putin's direction. It would be the largest structural change within the Russian government since Putin's string of political, economic, social and security consolidations in the early 2000s.Criticisms of Putin's Proposal

The Supreme Arbitration Court, as well as many in Russia's legal and political circles, has harshly criticized the proposed consolidation. On Oct. 10, seven judges from the Supreme Arbitration Court resigned in protest of the bill. The head of Russia's Intellectual Property Rights Court, Lyudmila Novoselova, said the quality of commercial arbitration would be reduced under the Supreme Court. Ivanov added that a unified court would end up being a "dinosaur guided by a small brain that needs tuning."

Many critics see political motives behind Putin's proposal. Having one super court instead of two competing courts would give one faction -- either siloviki or civiliki -- unprecedented power to shape politics, business and other facets of the country. It is unclear who would head the enlarged Supreme Court, which is aligned with the siloviki. Rumors have indicated that the Supreme Court's chief position could be given to the more liberal civiliki clan in order to avoid alienating foreign investors, who have said they are more willing to invest in Russia based on the more efficient track record of the Supreme Arbitration Court. Whoever might control the new Supreme Court, the appointment will create a battle within Putin's already delicately balanced inner circle.

There is another possible motive for Putin's proposal: The bill submitted to the Duma includes an amendment that would give Putin the authority to directly appoint prosecutors in the regions -- currently a prerogative of the prosecutor general. This would give the country's leader an unusual amount of granular power.

It could be that Putin is concerned about shaping the shifts taking place across the country. As Stratfor has observed, Russia is going through a series of social and political changes that are eroding Putin's consolidated control over the country. Handpicking the people within the regions' judicial circles could help Putin shape the policies and precedents for regional politics and business. In slipping the amendment in with larger judicial reforms, Putin could be signaling that he is increasingly worried about his power in the regions -- just as a growing power struggle is about to intensify in Moscow.

In 1967, the late British historian Hugh Seton-Watson wrote in his epic account, The Russian Empire, 1801-1917, "If there is one single factor which dominates the course of Russian history, at any rate since the Tatar conquest, it is the principle of autocracy." He goes on to explain how the nations of Western Europe were formed by a long struggle between "the monarchial power and the social elite." In England, the elite usually won, and that was a key to the development of parliamentary democracy. But in Russia it was generally agreed that rather than granting special privileges to an elite, "It was better that all should be equal in their subjection to the autocrat."

This profound anti-democratic tradition of Russian political culture has its roots in geography, or as Seton-Watson prefers to explain it, in military necessity. Between the Arctic ice and the mountains of the Caucasus, and between the North European Plain and the wastes of the Far East, Russia is vast and without physical obstacles to invasion. Invasion of Russia is easy, and was accomplished, albeit with disastrous results, by Napoleon and Hitler, as well as by the armies of the Mongols, Sweden, Lithuania and Poland. As Seton-Watson argues, "Imagine the United States without either the Atlantic or the Pacific, and with several first-rate military powers instead of the Indians," and you would have a sense of Russia's security dilemma. Whereas in America the frontier meant opportunity, in Russia, he says, it meant insecurity and oppression.

Because security in Russia has been so fragile, there developed an obsession about it. And that obsession led naturally to repression and autocracy.

Russia's brief and rare experiments with democracy or quasi-democracy were failed and unhappy ones: Witness the governments of Alexander Kerensky in 1917 that led to the Bolshevik Revolution and of Boris Yeltsin in the 1990s that led to Vladimir Putin's neo-czardom. Truly, Russia's fare has been autocracy, and given the utter cruelty of czars and communists, Putin is but a mild dictator. When Western pundits and policymakers say they are unhappy with his autocratic arrangement, they are basically making a negative judgment on Russian history. For by Russia's historical standards, Putin is certainly not all that bad.

Putin now represents an autocrat in crisis, a familiar story in Russia. His problems are, for the most part, unsolvable, like those faced by Russian autocrats before him. And there are many of them.

Controlling the ultimate destiny of Ukraine is of paramount importance to him, for reasons both geographical and historical. Russia grew out of ninth century Kievan Rus, located in present-day Ukraine. Ukraine's population density (compared to immense tracts of Russia) and geographical position make it a crucial pivot for the Kremlin, if it wants to permanently dominate Eastern Europe and the Black Sea. Yet, Putin finds that he cannot wholly control Ukraine or further undermine its sovereignty. There is simply a very substantial element in Ukrainian politics and society that demands a shift closer to Europe and the European Union. Putin has various tools to undermine Ukraine, such as erecting trade barriers and rationing deliveries of natural gas. But it is hard work, and he probably can never achieve an outright victory.

Putin fears the westward, pro-NATO and pro-EU stirrings inside the former Soviet republics of Georgia and Moldova. He fears unrest in former Soviet Central Asia, where reliably autocratic, Soviet-style regimes may soon face increasing turmoil at the hands of Islamic fundamentalists -- the very force Putin fears could destabilize Russia itself. Russia needs stability and compliance in its near abroad, and both will be increasingly at risk in Central Asia: Witness Kazakhstan's recent currency crisis. Putin not only worries about Russia's possible deteriorating position in world energy markets in the long term, but of the rising demographic weight of Muslims in Russian society over the long term, too.

Putin worries about an American-Iranian rapprochement, given how the estrangement for so long between those two countries has been so convenient to Russia's interest. Oh, and here's what Putin really isn't happy about: internal interference in Russian politics by American, pro-democracy nongovernmental organizations. What the United States considers human rights activity, he considers foreign subversion. And that goes for what American NGOs are doing in Ukraine also.

Putin wants to engage in cynical geopolitical deal making; instead he often gets lectures on morality from the West.

Could Putin actually be toppled? Not likely. The unhappiness with his rule that the Western media fervently wants to believe in is probably manageable, and a really free and fair election today in Russia would probably return him to power. He is only 61 years old and lives a relatively healthy life, unlike Yeltsin, who drank to excess. Sure, Putin is under extreme levels of stress. But you don't rise to his position in a place like Russia without the ability to handle levels of intrigue and anxiety that would psychologically decimate the average American politician.

The United States has every right to hate Putin for the Snowden affair alone. But, as I've indicated, Washington may be dealing with Putin for many years yet. As his dictatorship continues, he is liable to become more embattled, and rather than move toward reform, he is more likely to retreat further into a corrosive, authoritarian model. For that is a Russian historical tendency -- something Seton-Watson would have understood. If that is the case, Russian institutions and civil society, such as they exist, will further deteriorate. And with that, a post-Putin Russia, whenever it comes, could be a Russia in some substantial degree of chaos.

Putin is not like Spain's Gen. Francisco Franco, who in his latter years methodically laid the groundwork for a less authoritarian, post-Franco era. He is not like the collegial autocrats of present-day China, who have made their country -- with all its problems -- a relatively safe and predictable place for foreigners to do business and thus aid the development of the Chinese economy. While Russia, with its high literacy rates and quasi-European culture, cannot be compared with the much less developed Arab world, Putin's Russia does contain a scent of the thuggery and benightedness that characterized former regimes in Tunisia and Egypt. Because Putin is not a modernizer -- he is building neither a civil society nor a 21st century knowledge economy -- he is leading Russia toward a familiar dead end, from which only chaos or more autocracy can issue.

Russia is not fated to be governed illiberally forever. Geography is being tempered by technology, and individual choice can overcome -- or at least partly overcome -- the legacy of history. Though one cannot speculate about which future leader or group of leaders can save Russia, one can outline the shape of a less autocratic yet stable power arrangement. And that shape must feature decentralization. Because of Russia's very vastness -- nearly half the longitudes of the earth -- democracy in Russia must be a local phenomenon as well as a Moscow phenomenon. The Far East, oriented around Vladivostok, must be able to carve out its own political shape and identity, the same with other parts of Russia. The center must become by stages weaker, even as the whole Federation becomes more vibrant because of the emergence of a rule of law. Such a Russia would draw in a near abroad united by a legacy of Russian language use from Soviet and czarist times. Centralization is not the opposite of anarchy; civil society is. Thus only civil society can save Russia.

Just how much is Vladimir Putin's Ukrainian adventure actually costing Russia? Quite a lot, it turns out.

New statistics from the Central Bank of Russia indicate that almost $51 billion in capital exited the country in the first quarter of 2014. The exodus, says financial website Quartz.com, is largely the result of investor jitters over Russia's intervention in Ukraine and subsequent annexation of Crimea.

As Quartz notes, this was the highest quarterly outflow of capital from the Russian Federation since the fourth quarter of 2008. While Russia can mitigate some of the damage because of its extensive foreign-currency reserves—estimated at more than $400 billion—the new Central Bank statistics signal that worse is still to come.

Russia's economic development ministry has downgraded the country's forecast to less than 1% growth this year; an earlier estimate had been 2.5%. The World Bank projects that the Russian economy could shrink nearly 2% in 2014. That would cost Russia in the neighborhood of $30 billion in lost economic output.

Meanwhile, the Russian government's bid to pressure Ukraine could end up backfiring. The state-controlled natural-gas giant, Gazprom, OGZPY +5.53% recently jacked up the price of gas to Ukraine by 80% and levied an $11.4 billion bill on Kiev for previously discounted energy sales. But observers say that the price hike could lead to a reduction in purchases as Kiev diversifies away from Russia toward friendlier European suppliers. This may already be happening. On April 9 the Ukrainian government retaliated by temporarily ceasing purchases of Russian gas, pending resolution of the pricing dispute.Enlarge Image

Moscow's international standing is becoming increasingly tenuous. Russia has already been ejected from the G-8 and its path to accession in the Organization for Economic Cooperation and Development has been halted, at least temporarily. In the latest development, the Parliamentary Assembly of the Council of Europe stripped Russia of its voting rights in protest over its interference in Ukraine.

Russia's annexation of Crimea it is turning into a costly boondoggle. The Kremlin has already earmarked nearly $7 billion in economic aid for the peninsula this year, funds that will be spent on everything from infrastructure to beefed-up pensions for local residents. Even when balanced against anticipated gains from Crimea's energy resources and savings on naval basing arrangements, among other factors, that's a cost Russia's sluggish economy can ill afford.

The situation could become even more dire if Western economic pressure, which is still minimal, is ratcheted up. U.S. Secretary of State John Kerry has threatened additional sanctions against Moscow in response to its instigation of pro-Russian protests in the Ukrainian cities of Kharkiv, Donetsk and Luhansk. Such measures, Mr. Kerry has indicated, could include broad restrictions against Russia's energy, banking and mining. These sanctions could have significant, far-reaching effects on the country's long-term economic fortunes.

President Putin is currently riding a surge of popularity at home, propelled in no small measure by his assertive moves in Ukraine. When tallied in mid-March by state polling group VTsIOM, Mr. Putin's approval stood at nearly 72%, a gain of almost 10 percentage points from earlier in the year.

But the longer the crisis over Ukraine lasts, the higher the economic costs to Russia are likely to be. Former Finance Minister Alexei Kudrin, for example, has projected that Moscow's maneuvers in Ukraine could result in up to $160 billion in capital flight this year, and he concluded that the Russian economy will stagnate as a result.

Sometime in the not too distant future, it might become considerably more difficult for the Kremlin to continue to ignore the real-world price that is associated with its policies.

Mr. Berman is vice president of the American Foreign Policy Council in Washington, D.C.

Rumors persist about continued restructurings and consolidations among the security services within Russia. The shifts are part of Russian President Vladimir Putin's attempts to make the security organizations more effective and to limit the power of many figures among the security circles' elite in light of the crisis in Ukraine and Moscow's standoff with the West.Analysis

In 2014, Russia's security services suffered a series of failures regarding the uprising in Kiev, struggling to rally parts of eastern Ukraine and to read the West's willingness to unite over meaningful sanctions. These failures weakened the security services, the foundation of Putin's power in Russia. Particularly hampered was the Federal Security Service (FSB), Russia's largest security institution. The FSB is tasked with internal intelligence, and its sister agency, the Foreign Intelligence Service, is responsible for external intelligence. However, the Kremlin considers Ukraine — like many other former Soviet states — strategically critical to Russia's national security and territorial integrity, making the Ukraine crisis an internal problem and the FSB's responsibility.

The security services' failures also changed how countries along Russia's periphery view Moscow. Russia resurged into its former borderlands for nearly a decade, and its security services were widely seen as infallible. The events in Ukraine changed this view.Restructuring

In mid-2014, rumors spread in Russian media that Putin had purged the FSB of those intelligence operatives and analysts who faltered in handling Ukraine. In November, Putin said the FSB would undergo "restructuring," though he was vague in discussing the changes. Over the past week, hints of this restructuring have appeared. Russian media group RBC reported that Putin has decided that smaller security services — the Federal Drug Control Service and Federal Migration Service — would be consolidated under the Interior Ministry, one of the FSB's primary competitors within the security circles. These two institutions previously had strong connections within the FSB; the Federal Drug Control Service's current chief was a KGB general.

Putin's first strategy is to streamline many of the security processes in Russia while focusing the FSB on its primary directive: internal intelligence and counterintelligence. The FSB's influence and focus have spread throughout many institutions, such as the drug control service and migration service. The consolidation of these smaller groups under the Interior Ministry could serve to purge the FSB and hone its focus to prevent any more failures that weaken Putin's power base or authority.

A second strategy could be to continue sidelining members of the security elite who could eventually challenge Putin's position. Putin's control over Russia is fairly solid. In the latest polls by Levada, his approval rating has lingered at around 86 percent, and 54 percent of Russians believe that no one could replace Putin — a doubling of support over the past year.Many Powerful Figures

However, Putin still has concerns for his future, especially as hardships grow in Russia. Among the many powerful figures within Putin's inner circles who could compete with the Russian president is Security Council chief Nikolai Patrushev. Patrushev commands a great deal of loyalty among the FSB's ranks. He earned a reputation for organizing counterterrorism operations in Russia's northern Caucasus and was rumored to have organized many of the FSB's activities abroad, such as the assassination of former FSB agent turned critic Alexander Litvinenko. In 2008, Putin removed Patrushev as head of the FSB and moved him to the nominally important Security Council, which is considered more of an organizational role than a position of power.

In December, Stratfor received a report that Patrushev would be fired. However, because he has retained his post, it is likely that Putin decided to keep Patrushev in place because of his influence within Russia's security circles but limit his abilities. Multiple reports also surfaced in Russian media in November and January that Putin is backing Deputy Interior Minister Vladimir Zolotov and could give him the top Interior Ministry spot. Zolotov is the former longtime head of the Federal Protective Service, Putin's personal bodyguards, much like the U.S. Secret Service. Zolotov also was the bodyguard to Putin's mentor, Anatoly Sobchak, and is one of Putin's judo sparring partners. He is considered directly loyal to Putin and not tied into any other security circles or elites in the Kremlin.

The FSB has long influenced the Interior Ministry in an attempt to wield the ministry's large paramilitary and police forces. However, the Interior Ministry has begun acting more independently. Making Zolotov the ministry's chief could be another signal that Putin wants to ensure that the FSB focuses on its prime directive and that members of the FSB elite, including Patrushev, do not expand their influence.